Will New Gawker Owner Be Responsible for Hulk Hogan’s $140 Million Award?

Gawker Media is on the verge of being sold and the deadline for bidding has passed, but the question remains: Is the new owner responsible for the $140 million that Gawker owes Hulk Hogan for his successful invasion of privacy lawsuit against the company? And will the former wrestler get anywhere near that amount?

The short answer is no, anyone who purchases Gawker will get the digital media company free and clear of its existing debt, including the Hogan legal judgment if it’s upheld in court.

That money for the purchase of Gawker’s assets — likely to be in the neighborhood of $90 million, based on the stalking-horse bid submitted by Ziff Davis — would go to pay all of the company’s creditors.

Hogan would be regarded as an unsecured creditor — which would put him well behind those who supplied lines of credit and secured debt to Gawker Media. “In the Gawker case, there are some secured creditors and there lots of unsecured creditors,” Jerrold Bregman, a partner at Brutzkus Gubner who specializes in Chapter 11 and litigation matters, told TheWrap.

The net proceeds of the sale, after the cost of the sale itself, will be distributed first to the secured creditors. And then, whatever is leftover will be shared pro rata by all the unsecured creditors, including Hogan.

First, though, Hogan would have to win the appeal that Gawker has filed — where the size of the judgment could well be reduced even if the verdict is upheld. But then the wrestler, whose real name is Terry Bollea, would join what is likely a long list of Gawker’s creditors “entitled to his prorated share of the net proceed from the sale,” Bregman said in June.

“I would expect, that when all is said and done, ultimately there would be a settlement with a substantial reduction in the amount of the claim,” Bregman previously told TheWrap, but there are several variables.

Gawker founder Nick Denton has maintained that he’s confident at the company’s chance to win its appeal.

“This story will conclude with Gawker Media’s popular brands sheltered under new ownership and the importance of a free and critical press reaffirmed by the courts,” Denton told Recode last month.

The deadline for bidding does not mean we know who will control Gawker going forward right away. Companies are simply asked to submit a qualifying offer if they want to continue with the process. Ziff Davis made a stalking-horse offer of $90 million, so any potential bidders would have to top that (plus a breakup fee) to qualify for the actual auction that kicks off on Tuesday.

In March, a jury awarded Hogan a total of $140 million after Gawker published portions of a sex tape featuring the wrestler and the then-wife of his close friend, Todd “Bubba the Love Sponge” Clem. After awarding Hogan $115 million in damages, the jury tacked on another $25 million in punitive damages.

Gawker filed for bankruptcy following the judgment, which has also impacted the personal finances of Denton, who recently filed for Chapter 11 bankruptcy. He estimates that his liabilities are in the range of just over $100 million to $500 million. Denton’s biggest creditor by far is Hogan.

Entering bankruptcy was an essential part of making sure that Gawker remains a viable media company, with or without Denton.

“The whole point of Chapter 11 is to keep viable business assets going,” Bregman said.

Hulk Hogan was born Terry Bolea and attended high school in Tampa, Fla.

Thomas Richard Robinson High School

Hogan broke into the wrestling business in the late 1970's, working under names like Terry Boulder.

WWE

Hogan and his 24-inch pythons ran wild when Hulkamania swept the globe in the 1980's.

WWE

Hogan shocked the world when he bodyslammed the 520-pound Andre the Giant at Wrestlemania III.

WWE

Hogan's movie debut was in "Rocky III" as Thunderlips, a wrestler Rocky takes on at a charity event.

MGM

Hogan later starred alongside Christopher Lloyd in "Suburban Commando," one of many critical and commercial bombs Hogan was involved in.

New Line

Hogan admitted to taking steroids while testifying during a federal trial against WWF owner Vince McMahon. Hogan denied McMahon supplied or forced him to take the steroids, resulting in McMahon's acquittal.

WWE

Hogan left WWF and competed in WCW from 1994 to 2000. While there, he teamed with Scott Hall and Kevin Nash to form the infamous New World Order.

WWE

Hogan returned to WWF in 2002 and faced off against The Rock at Wrestlemania X8.

WWE

Hogan starred in "Hogan Knows Best," a reality show with his family, from 2005 to 2007. The show was abruptly cancelled after Hogan's wife, Linda Claridge, filed for divorce when she discovered Hogan cheated on her during filming.

VH1

A few months prior to the divorce, Hogan was harshly criticized after his son was sent to jail for reckless driving that left a friend with irreversible brain damage. Tapes released by local police revealed Hogan and his son blaming the victim during a phone call and planning to capitalize on the crash with a reality TV deal.

Clearwater PD

Hogan moved to TNA Wrestling in 2010, immediately becoming a major character in the promotion. He returned to WWE in 2014.

TNA

A clip from a sex tape featuring Hogan and Heather Clem, ex-wife of Bubba The Love Sponge, is published on Gawker in October 2012.

Getty Images

After returning to WWF, now called WWE, in 2014, Hogan was fired in July 2015 after a racist rant from his sex tapes was released by the National Enquirer.

WWE

On March 7, the trial between Hogan and Gawker began. Hogan is suing Gawker for $100 million in damages, accusing the outlet of invasion of privacy.

AP

On March 18, Hogan was awarded $115 million (more than the amount he was seeking) after a ten-day trial and less than a day of deliberation by the jury.

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Hogan’s turbulent career and personal life has put Hulkamania through the wringer

Hulk Hogan was born Terry Bolea and attended high school in Tampa, Fla.